IFC Invests in New Africa-Focused Microfinance Initiative

Washington, D.C., June 23, 2005—More
than 300,000 small-scale entrepreneurs in some of the world’s most challenging
economies are expected to be financed over the next five years by PlaNet
Bank, a new global investment company for microfinance institutions launched
this week. It is a joint initiative of the International Finance Corporation,
the private sector arm of the World Bank Group, and PlaNet Finance, an
international nonprofit organization dedicated to the development of microfinance.
Based in Paris, France, PlaNet Bank will be capitalized at €31.5 million
($38.2 million), of which IFC will invest €6 million ($7.3 million).
PlaNet Finance and its investment arm PlaNet Investments will provide equity
and quasi-equity to PlaNet Bank together with private investors such as
AXA and Société Générale and bilateral and multilateral agencies.
PlaNet Bank will create or invest in 15 microfinance institutions over
the next five years. At least 60 percent of these will be in African countries
such as Cote d’Ivoire, the Democratic Republic of Congo, Gabon, Guinea,
Kenya, Madagascar, Mauritania, Senegal, and Togo. The rest are expected
to be in PlaNet Finance’s network countries such as Argentina, Brazil,
China, India, and Mexico.
In the past 30 years the microfinance industry has expanded rapidly, in
large part through the commercialization of specialized financial institutions
that began as NGOs or donor-funded projects. IFC is one of the largest
investors in commercial microfinance with a worldwide microfinance portfolio
of more than $260 million. PlaNet Finance in turn provides technical assistance
and consulting services that have helped more than 800 microfinance institutions
reach self-sustainability since 1998. It has also increased microfinance
institutions’ access to financial markets through PlaNet Rating, its rating
subsidiary.
PlaNet Bank will build on the strong experience of PlaNet Finance in providing
microfinance institutions with services such as IT support, training, and
capacity building as well as funding. PlaNet Finance has a staff
of more than 150 people in 15 countries, and will provide management services
to investees, plus additional technical assistance as needed.
“This initiative demonstrates IFC’s continued commitment to and confidence
in the microfinance industry, which provides the poor with much-needed
affordable access to financial services," said Jyrki Koskelo, Director
of IFC’s Global Financial Markets Department. "By helping experienced
partners such as PlaNet Finance become owners and managers of local microfinance
institutions, we believe we can help create a more sustainable, far-reaching
microfinance industry that will benefit some of the world's poorest people.”
“PlaNet Bank will complement the services offered by PlaNet Finance,”
said Jacques Attali, president of PlaNet Finance. “It will help build
a stronger microfinance sector by helping existing organizations transform
into full-fledged, regulated financial institutions, and by creating new
microfinance institutions in countries that do not have enough of them
today.”
Through the new initiative, IFC and PlaNet Finance are supporting the Millennium
Development Goal of eradicating extreme poverty. At the same time, the
two organizations are supporting the UN Year of Microcredit’s objectives
of promoting sustainable access to financial services and encouraging innovation
and new partnerships to expand the reach of microfinance. In two
of PlaNet Bank’s target countries, Togo and the Democratic Republic of
Congo, more than 70 percent of the population earns less than a dollar
a day. Likewise, PlaNet Bank will develop financial institutions
to serve the poor in India and China, which together are home to the largest
number of the poor on the planet. Of the 2.8 billion poor around
the world living on less than two dollars a day, only 70 million have access
to credit.
The mission of IFC (www.ifc.org)
is to promote sustainable private sector investment in emerging markets,
helping to reduce poverty and improve people’s lives. IFC finances
private sector investments in transition and developing countries, mobilizes
capital in the international financial markets, helps clients improve social
and environmental sustainability, and provides technical assistance and
advice to governments and businesses. From its founding in 1956 through
FY04, IFC has committed more than $44 billion of its own funds and arranged
$23 billion in syndications for 3,143 companies in 140 developing countries.
IFC’s worldwide committed portfolio as of FY04 was $17.9 billion
for its own account and $5.5 billion held for participants in loan syndications.